Categories

Archives

While there is hardly anyone that is oblivious to the rising costs of a college education these days, there might be some people still not aware that there is another under-reported cost hiding in the college education receipt. College tuition is still out pacing inflation at public and private colleges and a review of this phenomenon can be checked out in depth at this report at BusinessWeek.com. Excluding the cost of college tuition, the cost of college textbooks is now starting to become a front and center topic for financial studies and government reports.

There are two main government studies that shed a light on the current crisis of textbook costs for college students. Both studies do a lot of referring to each other and their researched statistics. The first study was released by the U.S. Department of Education which you can read in full PDF format here.

The DOE study states that full-time students at four-year public colleges spend an average of $893 a year on textbooks and about $10 less a year for two-year students. The most interesting figure from this study is that since 1986, the textbook prices have risen almost 186 percent, or 6 percent a year. When you look at other product prices in the market they all generally rose by about 3 percent. Some public and private universities publish their own figures of college textbook costs for a student per year and they range from $400 – $1,300.

The next government study was carried out by the Government Accountability Office and is referred to many times in the Department of Education Report. This report is even more in depth and all 51 pages of research can be viewed here. One of the most interesting facts derived from the GAO report is the admission that in most cases identical textbooks are actually cheaper in foreign markets. Stated directly from the report, “Traditionally, the geographical separation of markets has made it difficult for U.S. students to acquire lower-priced textbooks from other countries. More recent developments in Internet commerce have reduced the costs for buyers in the United States to acquire textbooks from other countries, causing publishers to reexamine their distribution arrangements.”

Before uncovering the crumbling market of textbook manipulation and textbook sky-high profits in the industry, it’s important to look at a few more facts to understand the scope of the situation. Out of the entire percentage of a students tuition of a four-year public university, the textbook costs are now accounting for 26 percent of what the student will pay to attend college.

The high cost of textbooks is now having a direct impact on student’s education. When looking at the previously stated study by the Public Interest Research Group it claims U.S. college students spend $900 a year on average. The high cost has now forced about 60 percent of students to forgo purchasing a required book because of it’s cost according to a National Association of College Store study.

Besides trying to obtain profit and increase royalties, the GAO study found another major reason college textbooks keep on increasing. The GAO says the rise of textbook prices are typically due to the frequent publishing of new editions and textbook supplements. There are some specialties of study that would require this constant updating since science, technology and medicine can change so quickly. But a freshman physics book, calculus book and English literature book would make one wonder why there needs to be an updated version every semester. The assumption would be that if you create a new version and it’s to be used in class, you can sustain profits.

Before you start to assume who is getting all of the profits in the business, let’s take a look at the numbers as released by the National Association of College Stores. They breakdown the price distribution in an easy to view layout.

The college textbook revolution is now ringing in with a new model and ideas with the power of the Internet, Web 2.0 companies and also environmental minds pulling together. There are offshoots of a variety of companies that are aiming to fix the rising textbook problems.

Interviewed right here on the Business Shrink radio show, we had Jason Turgeon, who is one of the pioneers in this industry of trying to remove the middleman from the textbook market. Jason describes Textbookrevolution.org on his website like this, “Textbook Revolution is the web’s source for free educational materials. This is a student-run, volunteer-operated website started in response to the textbook industry’s constant drive to maximize profits instead of educational value. TBR’s mission is to drive the adoption of free textbooks by teachers and professors. We want to get these books into classrooms. Our approach is to bring all of the free textbooks we can find together in one place, review them, and let the best rise to the top and find their way into the hands of students in classrooms around the world.”

In our interview with Jason he mentioned a report that helped start him on his passionate drive to try and revolutionize the textbook industry. That report is titled, “Rip-off 101: How the Publishing Industry’s Practices Needlessly Drive Up Textbook Costs,” a report by State Public Interest Research Groups. It has some great statistics and will give you an even more in depth look into the industry which you can find here.

Another company called CampusBooks.com is trying to revolutionize the industry in a little bit of a different way. CampusBooks aims to be a comparison shopping engine much like sites like Shopzilla, Pricegrabber and Bizrate. Campusbooks.com describes themselves on their site like this, “a free Web service providing back-to-college shoppers with the most comprehensive search filters for the textbook industry. CampusBooks searches dozens of merchants and hundreds of listings and filters them into one of five categories — New, Used, eBooks, Rentals and International and provides customers with easy-to-find seller comments, more cost-saving coupons and up-front price summaries.”

There are a slew of other companies cropping up trying to combat the price problem with textbooks. A couple of websites that are often ignored but have played a major role in forcing textbook publishers to take a closer look at their business practices are right under your nose. Websites like eBay.com, Half.com (an eBay company) and Amazon.com can literally save students hundreds of dollars every year when buying textbooks.

A case study was done by ASUwebdevil.com. In this study that you can read here, they found that a typical English 101 textbook cost $52.75 at the ASU owned bookstore and at a private bookstore the cost was $57.25. If you skip off campus and hit your computer you can find the same book going for $40 on Amazon (new), $23 on Amazon (used), $26 on Half.com (used) or on the local Craigslist for $30 (used). Looking at Barnes and Nobles’s price, they still ring in a cheaper price at $46.75 compared to on campus bookstores.

For the person that wants to shop fast and get everything done in a hurry, they can obviously hit the campus bookstores, whether campus owned or privately owned and get an inflated price. For the student that is on a tight budget, they should take a close look at the Internet site’s prices and free sources that are growing in popularity like at Textbookrevolution.org.

One more piece of the story is still developing into a business that many thought would be impossible. Textbook rental seems to be taking off much more than bookstores gave it credit. Besides being given credit for a great idea, there are major hurdles to providing a campus-wide textbook rental program. The Illinois Board of Higher Education studied the feasibility of textbook rental out of their state university system bookstores. They found that the estimated start-up cost could be as high as almost $16 million at Illinois State University. Besides this study many bookstore owner’s have stated that space for inventory would be a major problem to fully implement this idea.

The high start-up cost hasn’t scared away Osman Rashid, 37, who is the CEO of Chegg.com. The business model of Chegg.com does not fit all students since their offerings are more geared towards first and second-year college students. They say the reason for doing this is because these students tend to take core classes where textbooks used tend to be widely used through the countries higher education system. While the actual numbers of textbook rentals are being kept secret, Rashid did reveal they have kids from over 1,000 universities using their service. One feel good aspect of the Chegg.com textbook rental service, is that they claim to plant a tree for every textbook that is rented through their service. With the green revolution in full swing on it’s own, this just might help bring Chegg.com more customers that are being raised with green-awareness.

If you would like to listen to the interview of the founder of TextbookRevolution.org just click on the Business Shrink Podcast icon on the top right. If you’re a college student that’s trying to weave your way through college debt and make it through, we’d like to know what you’re thinking. Leave us a comment and tell us what you use to try and make college more affordable. If you work in the Textbook Publishing Industry or work in a College Bookstore we’d like to hear from you to on these issues. Just drop us a comment or fill out the form here.